Key Highlights

  • NatWest Group Plc (LSE:NWG) rose 5.3% on 4 November 2026, leading UK banks higher as the FTSE 100 gained 1.8%.
  • The Bank of England is expected to raise Bank Rate to 4% from 3.75% on 5 November, which could support lending margins.
  • Third-quarter attributable profit was £1.5 billion with a return on tangible Equity of 21.6%.
  • Full-year guidance of around £17.9 billion of income and a return on tangible equity above 19% was maintained.

Why NatWest Is in Focus Today

NatWest Group Plc (LSE:NWG) was the standout performer among UK banks on Wednesday, 4 November 2026. The shares rose 5.3%, outpacing HSBC and Lloyds as the banking sector led a broad rally that lifted the FTSE 100 by 1.8% to 10,829.21. Investors were positioning ahead of Thursday's Bank of England decision, where markets expect the first Interest Rate increase since 2023.

For domestically focused lenders, higher rates can boost net interest income because the Yield on loans and the reinvestment of structural hedges rise faster than the cost of deposits. NatWest, with its heavy exposure to UK mortgages, Business lending and deposits, is among the most rate-sensitive banks on the index.

The rally also reflected a rebound after recent weakness. NatWest shares fell to their lowest level since mid-June after third-quarter results on 30 October, and slipped another 1.5% to 583.2p on 3 November. Wednesday's move therefore recovered a meaningful part of that decline.

Third-Quarter Results Recap

NatWest reported attributable profit of £1.5 billion for the third quarter, with a return on tangible equity of 21.6%, down from 22.3% a year earlier. Year-to-date return on tangible equity stood at 20.2%. Earnings Per Share were 19.3p and Capital generation before distributions was 71 basis points. The common equity tier 1 ratio rose to 13.5% from 13.2% at the end of June. Total customer Assets and liabilities climbed to just over £1 trillion.

The bank maintained the guidance it had raised at its half-year results, expecting total income excluding notable items of around £17.9 billion and a return on tangible equity of more than 19%. Investors had hoped for another upgrade, and the absence of one, together with a slight miss on net interest income offset by lower costs, led to the initial share price weakness. No new buyback or Dividend was announced with the quarterly numbers, in line with expectations.

Budget and Tax Backdrop

UK banks have been under scrutiny after Chancellor John Healey's Budget on 28 October 2026 raised the bank Surcharge on profits. Analysts suggested NatWest, Nationwide and Lloyds would feel the largest hit because their earnings are concentrated in the UK. Reports ahead of the Budget suggested the surcharge would be temporary and lower than feared, which sparked a rally in bank shares, and the Financial Conduct Authority has said it stands ready to investigate any leak of market-sensitive information.

Why Rates Matter for NatWest

A higher Bank Rate generally increases returns on the bank's structural hedge and lifts margins on variable-rate products. However, higher borrowing costs can also slow Mortgage Demand and raise the risk of Loan defaults if households and businesses come under strain. Credit quality has remained stable, with impairments manageable so far.

Sector Moves on the Day

The banking rally was broad. HSBC rose 4.8% and Lloyds Banking Group gained 4%, while miners also climbed as gold and copper-related stocks benefited from the softer dollar. The FTSE 250 added 1.0%, a sign that domestic sentiment improved alongside the large international names. Bond markets were calmer, with the US 10-year Treasury Yield edging down to around 4.92%. For UK lenders, the combination of a steeper interest rate outlook and improving risk appetite created the ideal setting for a relief rally. NatWest's outperformance also reflects its higher sensitivity to UK rates compared with globally diversified peers, which means it often moves more than the sector on days when rate expectations shift. Traders noted that the stock had underperformed in the week following its results, leaving room for a sharper bounce once sentiment turned.

Risks to Consider

Key risks include a sharper UK slowdown, intense mortgage pricing competition, higher tax charges and any deterioration in credit quality. Political and regulatory pressure on bank profits remains a theme, and further changes to tax policy could weigh on returns.

What Investors Are Watching Next

The Bank of England decision at noon on Thursday, 5 November, along with the vote split and Monetary Policy Report, is the immediate catalyst. Investors will look for clues on whether further rate rises are likely in 2027. They will also watch for any update on the cost of the bank surcharge, capital return plans and progress toward 2028 targets. The full-year results in February 2027 will bring the next major update on distributions for NatWest Group Plc (LSE:NWG).